Reinventing fire - fueling the change

Veteran green-energy pioneer Amory Lovins has a road map that businesses and governments the world over can use to reduce their reliance on fossil fuels and generate significant savings, profits and growth.

It can be tempting for business to see green energy use as corporate window dressing, a drain on organisational profits or something incidental to the serious business of a hydrocarbon-fueled global economy.

Yet Amory Lovins, co-founder, Chairman and Chief Scientist at the influential green Rocky Mountain Institute think tank, believes this is a serious mistake for any business focused on long-term survival and profitability - and not just because of recent high global oil prices.

In his new book Reinventing fire, he argues that committing to phasing out fossil fuel use in the medium to long term can actually improve employee productivity, cut energy bills, make manufacturing processes more efficient and mitigate risk.

While the world may still rely overwhelmingly on fossil fuels for transport and power, Lovins believes their cost has begun to out weigh their benefits. The inherent cost of finding, extracting and burning fossil fuels makes renewable energy more that competitive, Lovins argues, even before factoring in environmental impacts.

The big solutions for the next 30 years lie in four main areas of business activity - transport, buildings, industry and electricity generation. They include high-tech initiatives such as lightweight aircraft design, smarter power grids and traffic systems. Others are more straightforward: congestion charging and better building insulation.

The paybacks can be substantial. Lovins believes efficient building retrofits would pay for themselves four times over through extra productivity. Since many of these solutions are based on making better use of existing, everyday technology, developing economies arguably have the greatest gains to make.

Parts of the developing world are already leapfrogging the West in renewables adoption, says Lovin: "In Kenya, more households now get their energy from solar than off the grid. Installing efficient solar panels in a village can get productivity up. A simple telecoms network can double a village's income in its first year of use."

In 2011, more than half of the growth in renewables came from developing countries, particularly China, which has ambitious cleantech initiatives. Lower global prices for solar products are just one benefit.

Chinese companies, rather than the state, are leading this transformation. By contrast, the West has looked to its governments to lead investment in renewables, whether through tax breaks, feed-in-tarrifs or plant construction.

Despite some successes, in Sweden and Denmark in particular. Lovins believes businesses need to lead the transition in the West too.

Those that fail to keep pace with the changes will find themselves at an increased commercial disadvantages, hindering their ability to innovate and attract the best people.

As for the shale gas revolution happening in the US, which has the potential to be replicated globally, Lovins does not foresee it threatening the investment case for renewables.